The Madhya Pradesh government is mulling over petitioning the central electricity regulatory commission (CERC), after being slapped a fine of Rs 1 lakh for failing to deposit letter of credit (LOC). The government said that it owes around Rs 50 crore from different state power utilities.

"We are not skirting off depositing the LoC. We will deposit it. But our point is that we are paying our charges duly against the power drawn from the western region grid during this fiscal. In fact some power utilities owe us Rs 50 crore given that they had overdrawn power from the grid. We have in fact under drawn power during that duration for grid's safety," MP power management company managing director Manu Shrivastava said.

On August 30, CERC has slapped a fine of Rs one lakh each on state power utilities (SPUs) which failed to deposit LoC. CERC had drawn regulations for the LoC (payment security management) deposit to maintain grid discipline. In case, a SPU overdraws power, money or fine is deducted from LoC.

This regulation regarding LoC came into effect from May 3, 2010 and 16 SPUs were asked to deposit it. They were asked to pay 10% amount of the annual power overdrawn in a month, officials said.

The states filed their replies regarding LoC on December 30 and a hearing took place on January 10. After this 10 state power utilities deposited LoC.

CERC has toughened its stance on state power utilities following grids failure in some parts of the country due to power overdraws, causing inconvenience to the public. Power overdrawn during low grid frequency, causes it to collapse leading to blackouts.